3.9 Roading packages

Evaluation of roading packages

Where a package of projects includes a series of proposals that form a strategic long-term plan for a road corridor or area network, the following procedure should be used to determine the most cost-effective package of projects:

1. Develop options comprising alternative combinations, staging and sequences of components
2. Calculate the optimal start date for each component using a target FYRR as the criteria. The target FYRR is based on the target incremental BCR divided by 11 and expressed as a percentage (ie, if the target incremental BCR is 3.0 the target FYRR will be 27 percent, etc). The procedures to use for determining the year when each project in each option is likely to qualify for funding are as follows:
   1. starting with the first project in the sequence of projects in each option, calculate the PV of the benefits in each year and the PV of the project costs, and on this basis determine the timing of this project which will yield a FYRR above the target FYRR
   2. include the first project in the do minimum and repeat (i) above to determine the timing of the second project, which will yield a FYRR above the target FYRR for this next project
   3. repeat this process for each project in order.
3. Calculate the benefits for each year and option, based on the year when each project will qualify for funding under (b) above.
4. Calculate the PV of the benefits and costs of the projects in each strategy option.
5. Calculate the incremental BCR of each option in accordance with the procedures set out in section 2.10.
6. Select the package with the highest NPV which has an incremental BCR equal to or greater than the target incremental BCR.

Evaluating packages of projects will generally be undertaken over the full life of the projects. Accordingly, it may sometimes be necessary to extend the evaluation period to capture the benefits of all the projects during their expected useful lives.

It should be noted that options may consist of varying numbers of projects. Some options may consist of just one project, in which case the year when this project is likely to qualify for funding should be determined as the basis for comparing this option with other options.

Sequenced components

When considering packages of road projects that are to be sequenced over time, the FYRR should be used to confirm the appropriate start time of each individual component of the package.

Evaluation of packages comprising of road and TDM projects

The method of evaluation for packages comprising road and TDM projects (such as passenger transport or travel behaviour change strategies) is described in chapter 3 of volume 2.